Wholesale and Retail Reverse Mortgage Volume Dips in June, but Remains Strong

Home Equity Conversion Mortgage (HECM) endorsements fell by 16.4% in the month of June 2020, for a total of 4,203 loans according to the latest HECM Originators report from Reverse Market Insight (RMI). The fall came on the heels of a massive endorsement spike observed in May, and still accounted for the second highest endorsement tally in over a year.

The drop was led by the wholesale endorsement segment of business, which experienced a fall of 25.5% that month, while retail levels recorded a smaller decrease of 8.6%.

This fall made sense considering the clearing backlog of endorsements observed in May, according to RMI in its commentary accompanying the data.

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Among the lenders who still recorded increases for the month, HighTechLending stood out with a 604% increase to 169 loans, catching up on comparatively weaker figures recorded in April and May, respectively. Mutual of Omaha Mortgage grew 11% to 272 loans, constituting its second consecutive month of record highs.

Smaller originators also managed to record some noticeable increases. Bellevue, Wash.-based Goodlife Home Loans increased 152.9% to a total of 43 loans, while Los Angeles-based South River Mortgage grew by 450% to 22 loans, notable since South River only recently entered the reverse space.

Lunde previously detailed for RMD that the HECM Originators report is useful in seeing the splits in and health of the retail versus wholesale channels, which helps to illustrate how lenders are doing from a more individualized and channel-specific perspective.

Read the HECM Originators report at RMI for specific breakdowns and more regional performance data.

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  • 4,203 HECM endorsements total 50,436 HECM endorsements when multiplied by 12. That would make the hypothetical 12 months of 4,203 HECM endorsements, the fourth worst fiscal year in the last 14 fiscal years. So how are total HECM endorsements remaining “strong” as stated in the title to this blog?

    Total HECM endorsement volume for this fiscal year (ending September 30, 2020 or less than 44 days from now) is expected to be between 40,800 to 41,200. While that is a definite improvement over the total endorsements for fiscal 2019, Fiscal 2020 is expected to come in at the second lowest HECM endorsement count in the last 16 fiscal years.

    It is these unwarranted declarations of “glad tidings” that cause some of us to question the exuberance expressed about such low HECM endorsement volume. This is why some use the term Ultra Optimists those who promote this idea of that the reverse mortgage industry is stronger than ever.

    It was interesting to read what a well recognized industry stat provider also concludes about Financial Assessment as an impediment to HECM growth as he states in the following: “’The all-time high water mark for industry originations was $15.9 billion in FY2009. That was before Financial Assessment, and the lowering of PLFs that occurred for FY2010.” See

    https://reversemortgagedaily.com/2020/08/03/reverse-mortgage-market-stronger-than-ever-july-data-shows/

    So until financial assessment is revised to be less draconian towards HECM growth, do not expect huge increases in fiscal year HECM endorsement volume.

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